By Ike Swetlitz and Jonathan Randles | Bloomberg
Rite Aid has told its employees it intends to file bankruptcy less than a year after completing an earlier restructuring that failed to turn around the troubled pharmacy chain.
The company was unable to secure additional capital from lenders in order to continue operating the business and now intends to file Chapter 11, Chief Executive Officer Matthew Schroeder said in a letter to employees that was reviewed by Bloomberg News. The drug store chain is also planning to cut jobs at its corporate offices in Pennsylvania.
Rite Aid didn’t immediately return messages seeking comment. A copy of the letter was shared earlier on social media.
Schroeder blamed the job cuts on “the dramatic downturn in the economy,” tariffs and increased costs from suppliers and landlords. Rite Aid lenders would no longer cover payroll or other employment-related expenses “if we retain the entirety of our workforce,” he said in the letter.
A “significant” Rite Aid vendor recently notified the pharmacy chain that it would be shortening and restricting payment terms which could have the effect of accelerating a company loan, Schroeder also said.
A Chapter 11 filing would mark Rite Aid’s second bankruptcy in less than three years. The retailer first filed Chapter 11 in October 2023, using its time in court to cut $2 billion in debt and close roughly 850 locations as part of a plan that handed control of the business over to lenders.
Rite Aid emerged from Chapter 11 in September, saying at the time that it had become a stronger company with “significantly less debt and additional financial resources.”
But it wasn’t enough. The pharmacy still carried more than $2 billion in debt and has struggled with weaker demand and inflationary pressures.